Synopsis of Sunday business pages

Sunday Business Post The department of health is meeting resistance from unions over its planned move to the old Bank of Ireland HQ on Baggot Street as a number of staff who had offices previously will be forced to work in open plan offices. All 3 papers have coverage of Sean Fitzpatrick’s acquittal and the ODCE: There is a new set of tapes released by the Business Post this weekend with Sean Fitzpatrick conversations. The biggest takeout seems to be the Office of Director Corporate Enforcement raising concerns that Fitzpatrick's barrister was being appointed as a trustee to the board of charity Console, which seems outside their remit. There is a four-page reflection on the Sean Fitzpatrick tapes and on his acquittal during the week “The special liquidator of the former Anglo Irish Bank is pressing ahead with a €50 million damages case against the bank’s former auditors Ernst & Young, now renamed EY, over an alleged failure to uncover alleged “improper” loan transactions.” Brian Carey, of the Sunday Times, and Richard Curran, of the Sunday Independent, also covers the collapse of the Sean Fitzpatrick trial and the performance of the ODCE. Carey points out that its downfall was the ODCE’s civil law rather than criminal law approach to collecting evidence, specifically in the taking of evidence from the Anglo auditors EY. Meanwhile, in Curran’s view, the ODCE’s reputation is in “tatters” and he points out that the organisation wasn’t even fully spending its allocated budget and that it didn’t have sufficient numbers of suitably qualified people. Our conclusion last week that Leo Varadkar had won the race for leader of Fine Gael and the country seemed premature and while Varadkar is still red-hot favourite, Simon Coveney is making a race of it. FG are rising in the polls on the back of the new appointment. The Red C polls is as follows Fine Gael 29% (+5%) Fianna Fail 21% (-7%) Sinn Fein 15% (-3%) Ind 14% (+4%) Labour 6% (-) Others 15% (+1%) There is an interview with Michael O'Leary who gives his view on various politicians and when asked would he himself enter politics he says "I have no desire to get into **** politics in one of the government ministries. I wouldn't survive a week in a government ministry because I do not have the patience to be telling people what they want to hear. I'd be telling them the truth instead." He is confident of hitting 200m passengers per annum by 2024, Brexit or no Brexit. He thinks height in certain parts of Dublin City may fix things. He says six or seven story buildings here and there will not fix the current supply glut. The Sunday Times reports that Ryanair is expected to report after-tax profits of more than €1.31bn this Tuesday, after carrying 120m passengers in the financial year to the end of March. The businessmen behind the Persona Digital Telephony are challenging for damages in relation to the awarding of the state's third mobile phone licence to Denis O'Brien's Esat Digifone 22 years ago. However, their campaign took a hit last week as the court refused them the option to allow a professional litigation fund to fund the case on their behalf in return for a share of the spoils if successful based on a precedent from 1634. Flynn Management and contractors, who built Twitter's new offices, turnover was up from €38.9m in 2015 to €98m in 2016. Cabot Financial has bought €200m of loans off Cerberus. Cerberus have big books to work through and are actively appointing receivers if they cannot reach satisfactory consensual settlements with its debtors. Greencore chief Patrick Coveney believes that the British Government appreciates the importance of migrant workers to the British food industry. County Louth headquartered digital marketing firm Kong Digital is set to raise €3m next year as part of an expansion into the US. Michael Carey has topped up his funding for his East Coast Bakehouse by €1.75m bringing the total investment to €17m. Backers include Jelly Bean founder Richard Cullen, Lily O'Brien chocolate founder Mary-Ann O'Brien, former head of Kelloggs Europe Stephen Twaddell, Patrick Joy of Suretank fame, Larry Shields and Cyril Forbes. The Sunday Times reports that the €1.75m raised from shareholders is to fund a new packaging line for the production of individually packaged biscuits for the hotel and aviation industries. Hibernia REIT posted impressive results last week with its dividend up 47% and the carrying value of its portfolio up 10%. Its portfolio is now valued at €1.2bn and they have a rent roll of just under €50m. According to the Sunday Times, the chief executive, directors and key executives of Hibernia REIT will share a €7.5m bonus (to be awarded in shares) this year after the company reported a profit of €119m this year. Kevin Nowlan, Hibernia’s chief executive, will be granted €3.2m of the bonus which will be awarded in shares. "Custodian, the print management and digital design company which has the former Dublin footballer Alan Brogan as its commercial director, has been acquired by the supply chain and logistics firm PRL group." Noel Furlong's carpet and flooring company saw turnover drop from €107.1m to €98m in 2016. The company's accumulated profits rose by over €6.5m to €67.2m. The company has €37m in cash. It cites unrealistic wage demands and competitors using "predatory pricing looking to damage key customer relationships". There is a two-page special on the burgeoning gaming (not to be confused with gambling) industry in Ireland. IT Services firm IT Force is celebrating its most recent ISO award in the Business Post. Head of Google Ireland Fionnuala Meehan is interviewed by Colette Sexton. Sue O'Neill, chairperson of the Small Firms Association and MD of Shellcove writes an article in the Business Post about their annual conference last week. There is positivity among her members about economic growth investing in their companies etc. However, there are many headwinds, not least Brexit and the consequent pressure on the value of sterling which is hurting exporters hard. She intends to hold the Government to their commitment to end the inequitable treatment of income tax between self-employed and PAYE workers. She is also putting forward the case for reducing Capital Gains Tax from 33% to 20% and to extend the Entrepreneur's relief from €1m to €15m to bring into line with our UK neighbours. There is a profile on Warren Gatland ahead of the Lions series. Yellowbelly craft brewers has announced its move to a 9,500 sq. ft. facility in Wexford town. There is a management matters piece in association with IMI. There is also a focus on Cyber Security, the Food Industry Summit, the Internet of things, Irish Franchise Awards and the AIB Private Banking Law Awards. Timber Creek, a multi-billion asset management firm specialising in real estate and other alternative asset classes, is hoping to invest at least €200m into the Irish property market. Its strategy is aimed at mid-ticket lending in the range of €10m - €20m and will charge interest rates in the range of 6.5% - 8.5%. It will lend a maximum of €50m for up to 75% loan-to-value on a first mortgage position. After the abrupt closing last month of Yo! Sushi in the Dundrum Town Centre, the owners of Yo! Sushi, Graeme Beere and David Zebedee, have launched High Court proceedings against Dundrum Town Centre, and its owners the Hammerson/Allianz consortium. A History of Irish Business, a new that book details the Irish business landscape and its history, is to include interviews from Michael Smurfit, TK Whitaker, Tony Ryan and Denis O'Brien amongst others. Sunday Independent One51, the Irish plastics company, is reported to be planning a listing on the Toronto Stock Exchange as early as next year at a valuation of over €663m. According to the Sunday Independent, the company had an EBITDA of €55m in 2016 and plans to grow that to €100m within the next 2 years. Its acquisition of US rigid plastics company Macro is expected to add €16m in EBITDA next year and earlier this month CDPQ, the Canadian investment firm bought the 23% stake in the company previously owned by Dermot Desmond. This week's focus piece covers One51. The lending business of Chill Insurance, Chill Money, is contemplating entering the mortgage market in the next year. Chill Money's general manager, Fergal Lynch, said the company hopes to write business totalling €80m this year. The Sunday Times reports that La Parisienne Assurances, France’s oldest insurance company, is to enter the Irish motor insurance market in partnership with brothers Seamus and Padraig Lynch, owners of on-line broker Chill .ie. Ivernian Insurance a company owned by the brothers will act as the local agent for La Parisienne, selling cover on its behalf to Chill .ie and other insurance brokers. Unicorn Mineral Resources, the Irish minerals explorer that focuses on zinc, lead and copper, is reported to be in sales talks with a Canadian-listed company. According to Richard O'Shea, the company’s chief executive, initial talks have given the company a valuation of €7.3m. Eugene O'Callaghan, a director at the Ireland Strategic Investment Fund (ISIF), has said the fund is "actively working" on 60 potential investments with another 40 at an early stage. ISIF has more than €5bn left to invest, having already invested €3bn to-date and sees itself having deployed all of its capital by the end of 2021. Many of its investments have been in the SME sector, either through SME-focused lenders or in SME businesses themselves and when asked by Gavin McLoughlin if the amount of capital the fund has to spend risks inflating a bubble in SME valuations, O'Callaghan responded: "The impact of quantitative easing by the Fed and the ECB and the Bank of England and so on, has been to flood the world with money, essentially, and that then drives up prices". "I don't think the Irish economy is any different than anywhere else. We would look at every transaction that we enter into, and we're acutely conscious of valuation. But ultimately we look at the cash flows." Richard Curran's piece this week: - Curran uses the withdrawing of the 105 individually-let apartments at the casino in Malahide from sale to illustrate how the government's rent caps may help to cool the market in places without freezing it. The withdrawal had to do with the price tag that could be achieved for selling the units as a block given the new rent cap restrictions. A survey carried out by the Institute of Certified Public Accountants in Ireland on its 5k members found that a total 68% of those polled want a dedicated Cabinet minister with responsibility for Brexit to be appointed as a matter of urgency by the next Taoiseach. Dublin Aerospace, the aircraft maintenance company founded by Conor McCarthy in 2009, increased its pre-tax profits by 20% last year to c. €3.7m. According to the latest accounts, revenue grew by 4% to c. €45.2m in the 12 months to the end of last September.

Glencore, the mining giant, has re-started drilling at its Pallas Green prospect in Limerick after being suspended for a number of years. According to a 2013 Glencore report, the site could have as much as 42m tonnes of recoverable resources, making it the second-largest mine in Ireland after the Tara mine near Navan in Meath. Independent News and Media (INM) has made two new senior appointments to the Sunday Independent. Fearghal O'Connor joins from the Sunday Business Post and has been appointed as the deputy business editor while Gavin McLoughlin has been appointed as a business correspondent, having previously been a business reporter for INM. In an effort to make online passport renewal applications easier, Topaz is investing €1m into the rollout of 50 new photo booths across its nationwide network. Topaz has partnered with Photo-me in a 5-year deal to roll out the ID-compliant photo booths and its aim is to have a photo booth within 5km of 95% of the population. Niamh Bushnell, the former Dublin Commissioner for start-ups, has attracted Google and Bank of Ireland as backers for of her new venture, Tech Ireland. Tech Ireland, the comprehensive public database of innovation in Ireland, is reported to be formally launched in the next two months. This week's interview is with Ger Brennan, the managing director of MSD Human Health in Ireland. IP Telecom, the Dublin-based telecoms company, that offers telephony solutions to companies in Ireland and across the world, has invested €500k in its infrastructure by completing deployment of point of presence architecture into the BT Data Centre in City West Business Park in Dublin. Samantha McCaughren's Ergo piece: - Summix, a property company owned by Shukri Shammas and Tareq Naqib, both founders of Initial Capital in the UK, have plans for student accommodation projects in Galway, Cork and Dublin. It has submitted plans for a 349-room project in Dublin 8, but these have been met with rejection by local businessmen due to their already being plans for over 2.6k student accommodation units within 1km of the Summix property. - OpenJaw, the travel software company, has signed four new Asian airlines as customers. The airlines include Shenzhen Airlines, Sichuan Airlines, Hong Kong Airlines and China United Airlines. OpenJaw was bought by TravelSky, a Chinese aviation IT firm, last year. - The former executive chef at the Ashford Castle Hotel and previous owner of the Michelin-starred restaurant and hotel Erriseask House, Stefan Matz, has set up his own consultancy business, Stefan Matz Catering Consultancy, to provide advice on "everything from menu planning to recruitment advice". Sunday Times Limerick is on course to be a beneficiary of Brexit with the US financial services giant Northern Trust considering moving parts of its European headquarters away from London. A Northern Trust source informed the Sunday Times that up to 1k jobs could be earmarked for Limerick if the UK does not secure a favourable deal for the pass-porting of financial services post-Brexit. Cormac Lucey concurs with the calls from the European Council and within government to increase public spending over and above the numbers indicated in the new 10-year national development plan. Lucey cites the huge underinvestment during the crash which has left our national infrastructure strained, with limited capacity for the future, another reason he cites is the cost of borrowing and 1% interest rates which make it very economical to invest. Finance Minister Michael Noonan will sell as much as 28% of AIB in an initial public offering expected to be confirmed this week. The sale is bigger than the originally envisaged 25% and could raise an additional €250m. Brian Carey agenda piece:

- The Supreme Court has ruled that the Insurance Compensation Fund, which is funded by the exchequer must pay for the collapse of Setanta Insurance. Thomas Roeggla, an Austrian investor who has emerged as a big buyer of Irish hotels, is close to adding Mount Wolseley hotel, spa and golf resort in Co Carlow to his portfolio. The consideration is reportedly close to the €14.24m asking price. The sale will result in an excellent return for its current owners, Tetrarch Capital, which acquired the resort out of examinership for €7.5m in 2014. Lone Star, one of the most active buyers of distressed loans from IBRC and Nama, made approaches to buy EBS and PTSB over the last three years. Victoria’s Secret signed a long-term lease for a flagship store at Nos 28-29 Grafton Street with owner Iput earlier this year. The store which extends to 2.7k sq. mts., will produce a rental income of €1.85m a year and set a new benchmark rental value for Grafton Street.

Credit Suisse is buying the former headquarters of Bord na Móna in Dublin city centre for close to €40m. The block is located at Number 76 Lower Baggot Street. Student lender Future Finance is set to begin providing funding for college-goers in Ireland after being licensed as a retail credit firm. Tax investors at the Liffey Valley Clarion, which was partly acquired by hotel group Dalata earlier this month, claim to be owed back rent of up to €3.25m from Nama appointed receiver Kieran Wallace of KPMG. The US investment firm Cerberus Capital Management has got the go-ahead to take control of Knocklofty House in Co Tipperary, the former home of Lord and Lady Donoughmore. Iconic Newspapers, a media group owned by the British businessman Malcolm Denmark, has held talks about a possible purchase of the regional titles owned by Landmark Media, publisher of the Irish Examiner. The approach from Iconic comes as the Irish Times and Key Capital owner of the Sunday Business Post, are considering a possible bid for the Irish Examiner. Marks & Spencer reported a drop in sales at its Irish operations as it implemented “a strategy to reduce promotions and sale activity”, the company said last week. Ireland accounts for 35% of M&S’s international business i.e. business outside of the UK, the percentage drop in Irish sales was not revealed. Retail group Musgrave is the latest employer to freeze future pension entitlements in a bid to curb scheme liabilities that it claims are threatening its ability to develop and grow its business. The scheme had a deficit of €165m at the end of last year The owner of Tayto Park, Ray Coyle, plans to invest about €30m of his own money into developing a 250-bedroom hotel at the Co Meath theme park. The total cost of the scheme will be c. €45m with the balance coming from bank borrowings. CMS Distribution, a tech products wholesaler owned and run by Mayo man Frank Salmon had turnover of more than £250m and made an operating profit of £2.9m last year, according to recently filed accounts. The wine importer Febvre lost more than €1m in 2015, as it was hit with the costs of a legal battle between its founders and new owners. Renegade Spirits, which is distilling whiskey at the former Diageo brewery in Waterford, aims to distill 1m litres of alcohol this year. Harvey Norman reported its 5th successive year of sales growth in Ireland and reported losses of €1.3m to June 2016 down from €7.2m the previous year. Nick Webb’s inside track:

- Terry Clune’s Tranfermate is reportedly raising €15m in investment having been recently valued and €250m and having secured a prized license to operate in New York.

- John Mulcahy, formerly Nama’s head of property who joined Iput has amassed shares worth €4m according to Iput’s latest report.

- Paddy McKillen and Liam Cunningham have acquired a 50% stake in Cecilia House in Temple Bar, which houses Urban Outfitters. Gavin Daly’s chief executive interview is with Currency Fair’s Paul Byrne this week. Gerard Flynn covers the pay talks in the public sector. Sandra O’Connell has a good piece on Irish start-ups enjoying success in the US.

Twitter @RenatusCapital tweets this week: 78.8% & 66.4% - The average percentage of the value of their property that first-time buyers and subsequent buyers borrowed in 2016. 0.7% - Year-on-year decline in face-to-face retail spending for April, its 7th consecutive month of decline, according to @VisaIreland. 29,893 - The number of new mortgage loans last year, with a total value of €5.7bn, according to @centralbank_ie. @IrishTimesBiz €30k - Average level of household indebtedness in Ireland, making it the 4th most indebted country in the EU, according to @centralbank_ie. €16.6bn - The overall value of mortgages in arrears as of Q4 2016, equivalent to just over 13% of the total mortgages balance. @examinerbiz 3.75% - The average standard variable interest rate on primary dwelling house mortgages in Q1 2017, a decrease from 3.94% a year earlier. €143.8bn - The level of household debt as of Q4 2016, a quarter-on-quarter decline of €3.9bn, according to @centralbank_ie. @IrishTimesBiz 3.5% - The year-on-year increase in employment in the first quarter of 2017, bringing the total number of people employed to over 2m. 1% - The percentage of GDP property tax revenues were in 2014, below the EU average of 1.6%, according to @EU_Commission. 7.7% and 3.7% - The year-on-year increases in the average daily room rates and occupancy rates for Irish hotels, according to @STR_Data.

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